The Barruecopardo mine was owned by Oaktree they borrowed the money from the banks. Oaktree guarantee the debt and still does. Because Barruecopardo mine has only ever lost money they could not pay it back. If EQR did not take it off there hands and they shut it down, Oaktree was on the hook for all of it.
Oaktree required EQR to use 2/3 of the placement money to pay down some of the bank Oaktree guaranteed dept!!! This I think leaves EQR short on cash.
As for the intrinsic value. As Goedy said they need to show a profit. But given the opaqueness from them regarding the financial performance and Scottm post "The improvements from the ore sorters are aimed at lowering costs and increasing production = more revenue and profit. Unfortunately, it's a journey."
I am not seeing a profit in the short term, so yes I believe the current value is less than the debt.
Maybe in 12 months time it will be different story, but until then it looks like a continual death by dilution. With an other 30 million shares being issued to Morgans in a couple of weeks.
EQR Price at posting:
4.7¢ Sentiment: None Disclosure: Not Held
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